Tata Consultancy Services Sees Heavy Put Option Activity Ahead of March Expiry

Put Option Surge at Key Strike Prices

The most active put options for TCS are concentrated at the ₹2,600 and ₹2,500 strike prices, both expiring on 30 March 2026. Data reveals that 1,483 contracts were traded at the ₹2,600 strike, generating a turnover of ₹15.69 crores, while the ₹2,500 strike saw 1,552 contracts traded with a turnover of ₹8.82 crores. Open interest figures stand at 7,270 and 3,629 contracts respectively, underscoring substantial investor interest in downside protection or speculative bearish bets.

With the underlying stock price at ₹2,667.90, the ₹2,600 strike is slightly out-of-the-money, while the ₹2,500 strike is further below the current market price, indicating that traders are positioning for a potential correction or increased volatility in the near term.

Market Context and Stock Performance

TCS closed just 3.64% above its 52-week low of ₹2,561.30, reflecting a period of relative weakness compared to its historical highs. The stock has gained 3.28% over the past two consecutive sessions, slightly outperforming its sector, which rose 1.12%, and the broader Sensex, which advanced 0.24% on the same day. However, the stock remains below all major moving averages – 5-day, 20-day, 50-day, 100-day, and 200-day – signalling a bearish technical setup.

Investor participation appears to be waning, with delivery volumes on 25 February falling by 30.22% to 17.14 lakh shares compared to the five-day average. This decline in delivery volume may indicate reduced conviction among buyers, further supporting the cautious stance reflected in the options market.

Despite these headwinds, TCS offers a relatively attractive dividend yield of 4.15%, which may provide some support to long-term investors amid the current volatility.

Investor Sentiment and Hedging Strategies

The pronounced activity in put options at the ₹2,600 and ₹2,500 strikes suggests that market participants are either hedging existing long positions or speculating on a downside move. The open interest accumulation at these strikes is notable, with 7,270 contracts at ₹2,600 and 3,629 at ₹2,500, indicating that these levels are focal points for risk management.

Given TCS’s large market capitalisation of ₹9,63,496.71 crores and its status as a blue-chip stock, such put buying often reflects institutional hedging rather than purely speculative bearishness. This is consistent with the stock’s current technical weakness and subdued investor participation.

Moreover, the Mojo Score for TCS stands at 51.0 with a Hold grade, upgraded from Sell on 22 April 2025. This rating suggests a neutral outlook, balancing the company’s strong fundamentals against near-term technical challenges and market uncertainties.

Expiry Patterns and Market Implications

The expiry date of 30 March 2026 is a critical juncture for TCS options traders. The concentration of put contracts at strikes close to the current price indicates that investors are preparing for potential volatility or a correction in the coming weeks. Such positioning can lead to increased price sensitivity around these levels as expiry approaches.

Traders should monitor open interest changes and volume trends closely, as shifts could signal evolving market sentiment. A sustained increase in put open interest coupled with declining stock prices would confirm bearish momentum, while a reduction in put activity might indicate stabilisation or renewed confidence.

Comparative Sector and Market Performance

Within the Computers - Software & Consulting sector, TCS’s performance is inline with peers, but its technical indicators lag behind. The sector’s 1.12% gain on the day slightly trails TCS’s 1.28% rise, while the Sensex’s modest 0.24% advance highlights the stock’s relative strength despite bearish option activity.

Liquidity remains robust, with the stock’s average traded value supporting trade sizes up to ₹24.21 crores based on 2% of the five-day average. This ensures that investors can execute sizeable trades without significant market impact, an important consideration for institutional participants.

Outlook and Investor Takeaways

While TCS remains a dominant player with strong business fundamentals and a sizeable market cap, the current surge in put option activity signals caution among investors. The stock’s proximity to its 52-week low, combined with technical weakness and falling delivery volumes, suggests that downside risks are being actively managed.

Investors should weigh the company’s attractive dividend yield and neutral Mojo Grade against the bearish signals emanating from the options market. Those holding long positions may consider protective strategies such as buying puts or tightening stop-losses, while prospective buyers might await clearer signs of technical recovery before committing fresh capital.

Overall, the options market activity provides valuable insight into investor psychology, highlighting a preference for downside protection amid uncertain near-term prospects for TCS.

Key Financial and Market Metrics

TCS’s market capitalisation stands at ₹9,63,496.71 crores, categorising it firmly as a large-cap stock. The Mojo Score of 51.0 and Hold grade reflect a balanced view, upgraded from Sell in April 2025, indicating some improvement in fundamentals or outlook. The stock’s 1-day return of 1.28% outpaces the sector’s 1.12% and the Sensex’s 0.24%, demonstrating relative resilience despite bearish option positioning.

Liquidity metrics confirm that the stock can absorb significant trade volumes, supporting active institutional participation. The high dividend yield of 4.15% further enhances its appeal for income-focused investors.

Conclusion

The pronounced put option activity in Tata Consultancy Services Ltd. ahead of the 30 March 2026 expiry underscores a cautious market stance. While the stock shows some short-term technical weakness and reduced investor participation, its strong fundamentals and dividend yield provide a counterbalance. Investors should monitor option open interest and price action closely to gauge evolving sentiment and adjust their strategies accordingly.

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